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Poland Seeks Detailed Banking Reporting to Combat VAT Fraud

Poland wants to require all but the smallest of taxpayers to report activity in their
bank accounts on a daily basis, as the government ramps up its fight against VAT fraud.

The government aims to expand the use of the Standard Audit File for Tax (SAF-T),
according to
a proposal circulated as part of a public consultation ending May 31. SAF-T is an international
standard, defined by the Organization for Economic Cooperation and Development, for
electronic data exchanges to a national tax body or external auditors.

Regular taxpayers will ultimately benefit from fraudulent VAT transactions being detected
and eliminated sooner, but meeting the Sept. 1 implementation deadline will be a challenge,
tax practitioners said.

The challenge mostly concerns the 625 domestic banks and 49 credit unions that will
be, by the Polish finance ministry’s count, tasked with providing SAF-T compatible
reporting on behalf of their clients, the practitioners said. However, the proposal
would also impact taxpayers with foreign bank accounts, as they will have to do the
reporting themselves.

“The positive is that it will decrease the number of potentially fraudulent behaviors,
which will benefit the whole market,” Marcin Sidelnik, a member of PwC Poland’s tax
and legal services department—responsible for SAF-T projects—told Bloomberg BNA in
a May 30 interview.

Another potential benefit, according to Sidelnik, is that tax authorities will be
able to use the additional information to better target tax audits. “If the tax authorities
have all the data in a structured way, they will bother the taxpayers who are compliant
and pay taxes less,”
he said.

Implementation Deadline

But meeting the Sept. 1 implementation deadline will be a struggle, he added.

“For the financial sector, it’s an additional burden and effort to deliver this type
of information starting from September, which is only three months from now,” he said.
“Three months for this type of project, when you already have resources allocated
to other priority projects, might be very difficult.”

The Sept. 1 implementation deadline will also loom large for companies with foreign
bank accounts, which is the case for many multinationals, Wojciech Michalak, senior
consultant in tax management consulting at Deloitte Tax Advisory in Poland, told Bloomberg
BNA in a May 30 interview.

“If companies keep their bank accounts in various banks abroad, they will have to
adjust to each and every single type of bank account statement provided by those banks,”
he said. “This is on one hand a cost, and on the other hand time.”

SAF-T, or rather a Polish interpretation of it—as not all aspects are in compliance
with OECD recommendations—has been in use in Poland since last July, when it became
obligatory for taxpayers with at least 250 employees or annual revenue of more than
50 million euros ($56.1 million) to use the unified electronic format to provide,
on a monthly basis, detailed reporting of transactions related to value-added taxes.
Those taxpayers also must report a broad range of other data, including the general
ledger, bank accounts, stock and inventory movement, and purchase and sales invoices,
should the tax authorities request it as part of a tax audit.

The obligation to provide detailed monthly reporting of VAT-related transactions has
since been extended to small- and medium-sized enterprises, according to Sidelnik.

Bank Reporting

Michalak said the current proposal dovetails with another recent government initiative
whose purpose is to monitor bank account activity for signs of money-laundering and
related fiscal offenses.

According to that initiative, which was publicly consulted in March and is being reviewed
by government ministers, banks will also be obligated to report any instances of bank
accounts being opened, modified, and closed, and report this information, along with
the identity of account holders and beneficial owners, to a centralized clearing house,
where it would be cross-referenced and scored for risk.

For each transaction included in the current proposal regarding daily reporting of
bank account activity, the government seeks the following data:

name, address, and tax identification number of both sender and recipient of payment;

account numbers involved in the transaction;

exact time and date of payment made;

payment amount and currency;

account balance after payment; and

title and description of payment order.

By the finance ministry’s estimates, some 80,000 companies will be subject to the
reporting, and only companies of fewer than 10 employees and an annual turnover or
balance sheet below 2 million euros will be spared.

According to Mariusz Zygierewicz, director of regulatory and economic affairs at the
Polish Bank Association, implementation of the proposal toward the end of the year
is far more realistic to expect.

“This is a very big and new obligation,” he told Bloomberg BNA in a May 30 telephone
interview, adding that a Sept. 1 implementation was “impossible.”

“Firstly, it’s impossible because it’s necessary to adopt big changes, secondly there
is a problem that banks don’t have scope of information which is required by the ministry
of finance,” he said. “For example, the ministry of finance wants to get information
about the time of each transaction, not only about the date. We don’t have such information
in our domestic clearing system.”

According to Zygierewicz, banks will need between three and six months from the time
a detailed specification of the SAF-T file is published, which puts the earliest possible
implementation into October.

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